Supply Issues Affecting the Copper Mining Industry
As is demonstrated by the chart below, the demand for copper has exceeded the supply brought to market since 2009. In 2011, 16.5 million tonnes of copper were produced worldwide and this amount is expected to grow by approximately 3% annually. Data from the International Copper Study Group (ICSG) for 2012 suggests that international demand for refined copper is expected to exceed production by about 240,000 metric tons. The slow growth forecasted in copper supply is speculated to continue to increase the production deficit into 2013 because of both long and short term issues that affect the copper production industry. (http://www.econmatters.com/2011/12/copper-2012-supply-struggling-to-meet.html)
Declining Ore Grades
Man has been mining copper for centuries. As is characteristic of many other heavily-mined minerals, high-grade copper areas are becoming increasingly rare as many of the largest and highest grade areas have been discovered and depleted by mining companies. It was common in the early 1900`s to find sites that had up to 30% copper; however, the average percentage of copper in new sites found is 1% or less and deemed low grade. Because the copper production process is energy intensive, and therefore expensive, it becomes less feasible to develop the majority of new sites that are prospected. (http://www.mining-technology.com/features/featuremineral-munching-microbes-future-metal-mining)
Falling Chilean Copper Output
It is estimated that Chile produces about 35% of the world`s copper supply. However, Chilean copper production has fallen by 730 000 tonnes over the last decade. Although declining ore grades are part of the problem, as more iron ore must be processed to produce the same amount of copper creating cost overruns, supply disruptions at some of Chile`s largest mines continue to occur due to labour strikes. Labour striking tends to correlate with rises in the price of refined...
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